Shedding Light on Private Funding and HSR
Over the weekend, E.J. Schultz at the Fresno Bee took a look private funding for the HSR project – or the lack thereof. To those of you who have been following this blog since at least June 2008, you should not be surprised that private funders haven’t yet jumped into the project – and I’ll remind everyone of why that is in a moment.
To those not as familiar with the HSR project, Bill Lockyer’s comments last month that Wall Street wasn’t sold on the HSR project might have seemed like another in the onslaught of attacks on the project. So E.J. Schultz, one of the best reporters in California politics, decided to look further. Some of it he gets right, and some of it he doesn’t:
But the government’s gamble won’t pay off unless private investors jump on board the $40-plus billion project — and so far no one has pledged a dime.
If the money doesn’t come, the state and federal governments risk sinking billions of dollars into a rail line that never gets finished.
This isn’t correct. The government isn’t gambling on anything. If private funding never shows up, then the whole system isn’t finished. But because of the “independent utility” rules attached to HSR funding, which have been the subject of extensive discussion in the comments to Saturday’s post as a result of this memo, there’s no danger at all of the “government” building a half-finished project.
Schultz is incorrect to call this a “gamble.” There’s no risk at all. If funding doesn’t materialize to build the whole plan, the whole plan doesn’t get built. If another dime never materialized for HSR in California, the San Joaquins might get a new track between Fresno and Bakersfield, or the Surfliners would get sped up between LA and Anaheim, and that’s it. Those would be useful projects, and that’d be that.
Too often, people approach HSR as if it’s some kind of start-up business, when in fact it’s no different than a freeway widening proposal or a bridge plan. The plan may be great, but if you can never get full funding, the plan sits on a shelf.
Of course, Alan Lowenthal’s always there to remind Californians of the doom and gloom:
“This could be the greatest thing that ever happens to the state, or a real disaster,” said state Sen. Alan Lowenthal, D-Long Beach, who has taken a lead oversight role.
He doesn’t actually explain how it would be a real disaster. Given the safeguards listed above, it’s not really possible for it to be a disaster. It would be nice of Lowenthal would adopt a more constructive approach.
Schultz goes on to cite Bill Lockyer’s comments to the San Diego Union-Tribune that set off the questions about private financing. Significantly, Schultz reports that Lockyer is backing off those comments to an extent:
In an interview with The Bee, he softened those comments some, saying investors are “skeptical,” but that “these are just preliminary comments” made before anyone has spent time “making a disciplined investment decision.”
Schultz also quotes California High Speed Rail Authority Deputy Director Jeff Barker, who explains how the timeline for private funding would work:
The authority expects it might even have to start construction on some of the segments before investors step up. The estimated phase-one completion date is in the 2019-20 fiscal year.
“We’ve said all along that the private investment in the project is going to come toward the end,” said Jeff Barker, a rail authority spokesman. “Before the private sector is going to put private money into this, they’re going to want to see that it’s real.”
In one potential scenario, construction companies, rail-car makers, train operators and financial institutions could form a consortium. In return for an investment, they would get a cut on profits during a 30-year lease, plus control of the system — including the power to set fares, Barker said.
To longtime readers of this blog, that’s something you’ve known for a while. At the June 2008 CHSRA Board Meeting, a presentation was given explaining what it would take to get private funding:
There was a fascinating presentation from the Infrastructure Management Group and Lehman Bros. They were hired as consultants by the Authority for the issue of bringing private equity investment into HSR. Their presentation to the board was based on the responses they received to their Request for Expression of Interest (RFEI), sort of like a pre-RFQ (request for qualifications). Diverse operators and contractors, including SNCF (the French National Railway), Britain’s Angel Trains, and giants like Alstom, Parsons, and Goldman Sachs responded.
Long story short, there’s lots of interest in it but it would require at least 60% public financing. Probably at least 75%. The good news is that if we get both the bond money and a matching federal amount under veto proof legislation (S.294 and HR 6003) pending in the Congress we are there. $20 billion S.F. to L.A. and beyond to Sacto and San Diego.
In other words, as reported to the board, the private sector isn’t going to step up until they see a considerable federal contribution. It’s not that they have no faith in the California project. It’s that they’re not yet sure Congress is going to properly fund its share. Assuming that the federal government does authorize the $15 to $17 billion that we need from them, then there is every reason to believe the private sector will step up.
For example, as I posted just a few days after reporting on Bill Lockyer’s comments, one of the world’s leading investment banks, UBS, actually sees HSR as a sensible investment. Once they see the federal government stepping up, private funders will too – but not until Congress has made its move.
To his credit, Schultz reported on the expressions of interest from private funders that were listed at the June 2008 board meeting. Since then, we’ve seen interest from others as well, including China. Schultz then goes on to mention the litany of critical reports put out about the HSR project – the flawed LAO study, the flawed State Auditor’s report, the deeply flawed Berkeley ITS ridership report. Unfortunately, Schultz presents these reports as objective criticisms, and not as the flawed documents they really are, but the overall effect is to make it appear like there are warning signs that are causing Wall Street to hold back.
That’s not what’s really happening. In reality, HSR critics are using these flawed studies to try and convince Congress to not fund California HSR, so as to strangle in the crib a project they hate. Without Congressional funding, there is no private funding. That’s the key point here, and I’m very glad Schultz let Barker make it – that elevates his article well above the much more flawed items we have a depressing tendency to see when it comes to HSR reporting.
In short, the ball is still in Congress’s court. When they finally do fully fund HSR (and I do believe it is a matter of “when” and not “if”), then we’ll see the private funders step up and make their contributions.
This whole situation reveals the deeper flaws in treating infrastructure like a business proposition. Nobody demanded to see a business plan before the Interstate Highway System was built – Americans declared it was necessary, and funded its construction through tax revenues, with private funding not playing any role at all. Here in the 2010s, we have a strong need for a new kind of transportation infrastructure. It would be nice if Congress had the guts to simply find a new revenue source and fund the construction of that infrastructure, to create jobs and economic growth now and for decades to come.
But they don’t, and with a California governor who has always been in love with public-private partnerships, we play the hand we’re dealt. Private funding will indeed come for HSR – as long as we get Congress to step up and do its part.
I think it should be obvious that investors would be VERY interested in the project after it’s broken ground. Hell, if I had a few billion dollars, I’d invest it in this project.
Eric M Reply:
August 2nd, 2010 at 10:54 am
I agree. I really think they will come forward as soon as the EIR is done. Although, it would be nice if someone like China came out soon and said they will cover the missing funding themselves if it doesn’t materialize from our own federal government. China might figure, if they pony up the money for the California system, it will be a nice sales display for the rest of the country to get them future contracts.
Samsonian Reply:
August 3rd, 2010 at 10:44 am
China, and every other investor, isn’t doing this out of the kindness of their hearts. They’re doing it to make money.
I’m concerned about this whole approach with a private investor. It really seems to amount to a giveaway after the public is expected to take on most of the risk anyway. We would be much better off if the government and the public would set up to the plate, and fully fund it, rather than half-ass it and give it away.
jimsf Reply:
August 3rd, 2010 at 11:12 am
I agree. This should be a public transportation project just like the interstate freeway system. TI would even be considered a defense project. There would be no faster way to evacuate a couple million people out of the LA basin than via high speed trains carrying 1000 people each, picking up from several different locations. You could in the event of an emergency, get a whole lot of folks up and out of that basin to a safe area in the high desert very quickly.
synonymouse Reply:
August 3rd, 2010 at 12:13 pm
And this “emergency” would not shut down the hsr? You are forgetting we live in lawyer-land.
The hook with public transit is who is going to pay for it. Your errant hsr is likely to end up like AC Transit.
jimsf Reply:
August 3rd, 2010 at 3:09 pm
What’s wrong with AC transit? They do a very good job of serving a very large area in a very reliable way.
Peter Reply:
August 3rd, 2010 at 3:10 pm
He’s on his anti-union shtick again. Shtick is my word of the day.
jimsf Reply:
August 3rd, 2010 at 3:30 pm
Schtick is a very good word. So is schlep. and rigamarole. Living in the city, I’m always having to schlep down the way to see what ll the rigamarole is about!
that said I always find it interesting when americans like syn, have the unmitigated gall to suggest that their fellow working americans shouldn’t make a living wage.
Everyone should work for minimum wage and no one should get healthcare and everyone should have to work as many hours per day, preferably sun up to sun down, as their employer says. Americans are spoiled with expectations of a high standard of living. They clearly don’t deserve it. There are only a handful of of people, the ruling class, who should live well, everyone else should serve them and be happy for the chance to make a sixpence and pocket full of rye in exchange for changing out the chamber pots.
Peter Reply:
August 3rd, 2010 at 3:32 pm
And only the rich should have access to fast, safe, reliable transportation. Preferably either just limousines or Gulfstream V business jets.
jimsf Reply:
August 3rd, 2010 at 3:46 pm
^thats when they aren’t being carried around like Cleopatra on a thrown carried by enslaved third world children under the direction of Kathy Lee Gifford.
Samsonian Reply:
August 3rd, 2010 at 6:53 pm
A living wage is one thing.
Public employees and their unions engaging in what amounts to extortion of the public, is quite another.
Alon Levy Reply:
August 3rd, 2010 at 9:29 pm
The main problem with US transit unions is not high wages; it’s overstaffing. For example, the subway systems in New York and Tokyo have about the same average wages and benefits per employee, but the Tokyo subways carry twice as many passengers with one third as many employees.
The Bay Area transit unions are unusual in that their members also get higher wages than is normal, but the difference is smaller than the difference in staffing levels.
Nathanael Reply:
August 3rd, 2010 at 11:20 pm
“The main problem with US transit unions is not high wages; it’s overstaffing. ”
Which is why the OPTO fights in NYC and Boston are a big deal, and a case where the unions have been on the wrong side. Also the station agent (former token seller) fights in NYC. Also the fights over the craft wars and resultant featherbedding at the LIRR.
Not going to be an issue in a new system.
Caelestor Reply:
August 3rd, 2010 at 11:48 pm
Seriously, why do you need a conductor on a subway train? What do they do that the driver can’t? Transfer them on to the platforms where they can help control the crowds, like in Asia.
jimsf Reply:
August 3rd, 2010 at 3:17 pm
Depends on what kind of emergency. In some cases mabye but not in everycase. Says theres a threat. You can start getting people out. Say something happens in one area that doesn’t yet affect other areas, you have time to get people out of harms way. Say there’s a small nuclear device, or a chemical attack, or even a chemical spill. and suppose you can use trains to evacuate folks who are downwind before the plumes arrive. Having something in place is better than having nothing in place. That’s why we have interstates. As it stand right now in southern california, the freeway system is gridlocked everyday most of the time, so its useless for any kind of evacuation at all. If you 8 hours to evacuate 3 million people from la, I don’t think anyone would wind up getting out at all. The whole system place would grind to a halt.
side note, hey I wonder which city hollywood has destroyed more times, ny or la?
Peter Reply:
August 3rd, 2010 at 3:19 pm
And what do lawyers have to do with it?
wu ming Reply:
August 3rd, 2010 at 11:17 am
exactly.
I think private funding will flow in once we have more models for the high-speed rail stations. Every high-speed rail station I know from Europe has always functioned as a mall. Depending on ridership you could either find everything there or at a drugstore. great examples for that are restored and new stations like St.Pancras. http://www.stpancras.com/
All of these media comments/discussions seem to focus on the system itself and disregard the stimulus provided to surrounding communities. Additional mobility by its very nature will stimulate economic activity nearby. That’s why there on carls jrs and 7-11s in the middle of nowhere along the 1-5. If you deliver people to a location, economic activity happens, whether its the hot dog cart at the bart station, or TOD in downtown Fresno.
Alon Levy Reply:
August 2nd, 2010 at 3:33 pm
Jim, the highest-multiplier stimulus is not infrastructure; it’s direct cash aid to the unemployed, and emergency aid to prevent states from cutting spending. If all you want is jobs, you should provide jobs, not pour concrete. HSR is a good transportation project; it’s not a good economic stimulus.
Bianca Reply:
August 2nd, 2010 at 3:44 pm
Alon, I think you are reading “stimulus” too narrowly- I don’t think Jim meant it in the same terms as Stimulus Bill that Congress passed, but more generally. Communities served by HSR will benefit economically over time, as more business is brought to the community by virtue of HSR. Look at Zaragoza (serving as a halfway meeting point between Madrid and Barcelona), or the countless shopping centers located at JR stations in Japan.
Alon Levy Reply:
August 2nd, 2010 at 4:14 pm
You’re right that HSR helps the towns it serves, but that’s just part of transportation value. Fresno and Bakersfield can expect economic revival near the train stations, if nowhere else, but only if CAHSR delivers the same service quality as the AVE or the Shinkansen. You shouldn’t expect an upgraded San Joaquin to deliver the same economic benefits.
TomW Reply:
August 3rd, 2010 at 6:31 am
Pouring concrete does provide jobs!
Something I’d love to see is how much of the construction cost will be the labour costs, rather than materials. I strongly suspect it’s very high. Concrete and steel are cheap – making them into bridges and trains takes large amounts of people’s time.
Caelestor Reply:
August 3rd, 2010 at 11:49 pm
Doesn’t mean you can waste ridiculous amounts of concrete, as some people will inevitably point out.
jimsf Reply:
August 2nd, 2010 at 5:46 pm
Yes I’m thinking of its long term value to the state as we move forward. In addition to the jobs it creates directly through construction/related and the impact that those jobs have on the surrounding communities, and in addition to the potential for adjacent economic stimulus in the form of tod and similar investments, there is a long term stimulus that comes from keeping california mobile and accessible for residents and it also helps us be competitive internationally. Its a good and necessary thing no matter how you slice it.
Missiondweller Reply:
August 3rd, 2010 at 9:07 am
That would be extremely surprising to someone like me with an economics background.
Can you please provide a link to a study supporting this???????
Alon Levy Reply:
August 3rd, 2010 at 12:53 pm
I think economy.com said this back when Obama proposed the stimulus. And if I’m not mistaken, the CBO said the same thing at the time.
Nathanael Reply:
August 3rd, 2010 at 11:18 pm
Alon is dead right; cash aid to the unemployed and aid to prevent states from cutting budgets has the *best* multipliers.
*After that*, infrastructure funding has pretty decent multipliers, though.
As the independent segments of CAHSR begin to be built companies will begin taking a real look at investing in HSR.
I noticed from my time living in Portland that there’s a psychology involved in rail investments. People have some fear of large rail projects with big price tags. However, as components come together, people’s confidence increases and they get behind it as it becomes obvious the components add up to something more than a sum of the parts. In Portland in the 1990′s voters rejected a large build out of its Light rail (MAX) system. Later, voters approved components of the system (First a line extending north towards Vancouver, secondly a leg south to Clackamas and more recently a line finally extending across the Colombia river into the State of Washington). Private industry jumped on the bandwagon once it was underway, planning all kinds of transit oriented development.
In this same way, once the components begin to be constructed here in CA under the independent utility concept, citizens, politicians and yes, investors will take notice. Here in CA we’re fortunate that we have already secured both a large state bond and additional funds from a friendly federal government. This is the much needed initial momentum that’s so critical. Once construction is underway the momentum will build and private industry will jump on the bandwagon.
Considering how bad the air is in the san joaquin valley, it would make the most sense to electrify the sjq service, along with that proposed mcd-bfd independent section. That way the whole thing is already electrified for hsr when its time. SJQ’s pulled by electric locos and hitting 110 on the upgraded portion, would be a great interim demonstration railroad to keep the public paying attention.
Peter Reply:
August 2nd, 2010 at 11:21 am
Why stop at 110 mph? Get some AEM-7s from the NEC and run them at 125 mph. The tracks and signalling would be built for 220 mph, so 125 mph would be a snap.
jimsf Reply:
August 2nd, 2010 at 12:10 pm
Does the proposal for that section of upgrade ( as one of the sections recently submitted as “independent utility”) include full grade separations?
Joey Reply:
August 2nd, 2010 at 12:16 pm
They’re not planning to upgrade the existing BNSF line. They’re planning to run the San Joaquins on the new HSL until a full high-speed passenger service is implemented.
Though the portions of existing rail lines that follow the high-speed alignment will probably benefit from the new grade separations as well.
jimsf Reply:
August 2nd, 2010 at 12:39 pm
Isn’t hsr going to follow the bnsf from fno to bfd? I thought that was the plan and that the sac-mcd and mcd-fno portions were UP but still up in the air and may wind up on bnsf? I guess its all still up in the air then.
Peter Reply:
August 2nd, 2010 at 12:43 pm
The memo actually describes how it would be done under the different alternatives being considered.
I’m crossing my fingers for the Central Valley portion to be chosen, as that would build the fastest portion of the entire system, and allow for relatively quick completion (and electrification) of the “test track”.
HSRforCali Reply:
August 2nd, 2010 at 2:00 pm
Same here, I want to see the test track built as quickly as possible. Obviously, LA-Anaheim and SF-SJ would not make good test sections.
jimsf Reply:
August 2nd, 2010 at 3:22 pm
The sooner californians actually see a high speed train running down a track in california the better, imagine the media event. Once they see it, californians will dump the what ifs in a heartbeat and the tune will change to “hey where’s ours?” or “why’d they get it, why don’t we have it?” and the phone calls to representatives will pour in.
Matthew Reply:
August 2nd, 2010 at 8:54 pm
I agree in principle, but be prepared for the train to nowhere arguments if that track is located in the Central Valley and doesn’t connect either LA or the Bay Area to something semi-worthwhile. A demonstration track in the middle of farmland will only get people excited for a short while. In that sense, working on LA-Anaheim and SF-SJ in parallel might be about the best political compromise available.
Alon Levy Reply:
August 2nd, 2010 at 9:08 pm
Jim nailed it. Matthew, I think just a CV test track would be fine, if only because the $9 billion Prop 1A chest would allow connecting the track to at least one of LA and SF with relatively little additional money.
I would like to see cost estimates per mile for the CV test section, it would give the lowest cost per mile for the HSR system. It would certainly help build momentum for HSR and show what higher speed trains can do. 110 mph service can compete with a vehicle and beats it in traffic congestion.
It’s still hard to believe that you folks are still discussing the “independent” sections as if they had any stand alone economic activity. There is no doubt in my mind that, absent the complete system, LA to Anaheim, the Peninsula and probably the SJV sections would never wash their faces economically, and therefore do represent money down the drain. Choice of the peninsula and LA Anaheim as starting points are purely political and nothing to do with transportation policy. Metrolink could run fast trains to Anaheim on more or less the same schedule at a fraction of the cost.
RailPAC’s policy is that the Los Angeles (Sylmar) to Bakersfield gap should be the first and only segment to be constructed with available funds. The variable grades should provide all the testing you want, and connected to the San Joaquin service will provide real utility and reduced journey times.
PD
Peter Reply:
August 2nd, 2010 at 3:33 pm
So, you want to START with the technically most difficult section that involves the most tunneling and has the highest chance of cost-escalation?
Peter Reply:
August 2nd, 2010 at 7:28 pm
Also, Bakersfield-Palmdale is the least-advanced in terms of the environmental certification process. It’s the segment where construction will likely start last.
synonymouse Reply:
August 3rd, 2010 at 11:50 am
On the contrary it may be early on the agenda, to cement the fix, that is assuming a Brown-PB victory in November.
Clearly the Palmdale developers are extremely well connected politically, to engineer a major deviation to their bailiwick. Clearly what they have in mind is a “free”, paid for by statewide taxpayers, quasi-BART from LA to Palmdale.. Of course for this long-distance commuter scheme to work they will have to lobby for subsidized, below market fares.
Of course this scheme is about as non-green as you can imagine: the antithesis of live close to work and build a megalopolis where there’s no water.
Morphing the hsr into regional mass transit guarantees non-profitability. What private investor or operator is going to want to get involved unless there is public payola forthcoming? Can you imagine BART under private operation? Maybe in Hong Kong, but not here.
The CHSRA project was born of politics, not business. Consider the merged hsr and Caltrain. Any disruption on Caltrain is likely to affect the hsr. An entrepreneur would have gone for an independent route providing more dependable service needed to build up the patronage and the bottom line.
Peter Reply:
August 3rd, 2010 at 12:08 pm
While synonymouse’s statements, as always, completely lack a basis in substantive, verifiable fact, I’m more and more impressed with his carefully-crafted wording. It is, to paraphrase Spokker (I believe), inspired trolling.
I’ll discuss each gem in detail.
“assuming a Brown-PB victory” – This one is truly impressive for its imaging. It links the Democratic Party, the Jerry Brown, the CHSRA, and Parsons-Brinkerhoff together, and implies that a victory for Brown is a victory for PB. In turn, this implies that by voting for Brown, you will be voting to give money to a specific corporation.
The assumption that Palmdale developers have “engineer[ed] a major deviation to their bailiwick” is masterful, since it requires anyone contradicting him to prove a negative. I’m really not sure how you can prove the non-existence of a conspiracy.
Evoking BART is another synonymouse favorite. It’s a “perfect” analogy for everything he wants to argue: BART requires subsidies, hence HSR will need subsidies; BART is loud, hence HSR will be loud; BART uses ugly, brutalist architecture, hence HSR will use ugly, brutalist architecture. The list goes on. Mentioning BART also implies that HSR will offer slow, local service only.
There are a couple more, but you guys get the picture.
synonymouse Reply:
August 3rd, 2010 at 12:31 pm
If you have lived in the Bay Area for 45 years you will be aware of the Burton Democratic Party political machine which totally dominates it. They hold virtually every political office in the region.
BART-Bechtel is joined at the hip to this machine. So is the BAC, MTC, ABAG, you name it. It is the ultimate good ol’ boy club. Where do you think BART’s enormous political clout comes from? These are the “big dogs” and they all know each other and work together. It is the Bohemian Club every day.
PB’s brutalist track record is there for all to see. wysiswyg
Peter Reply:
August 3rd, 2010 at 12:10 pm
Oh, and syn, you missed the fact that I was referring to Bakersfield-Palmdale, not Palmdale-LA. Of course, you will deny that you missed it and throw out new conspiracy theories. Have a nice day!
synonymouse Reply:
August 3rd, 2010 at 12:17 pm
And you are missing the obvious that the commitment to building the Loopy route would guarantee serving Palmdale. Tejon would proceed directly to LA leaving the Antelope Valley to a more appropriate regional route.
Peter Reply:
August 3rd, 2010 at 12:37 pm
Right, calling the Antelope Valley alignment the “Loopy Route” or mentioning the Tehachapi Loop when talking about HSR is another impressive rhetorical tool: It invokes “slow” and “delay”.
synonymouse Reply:
August 3rd, 2010 at 12:46 pm
An extra 30 route miles is going to make it faster? I am assuming an equal number of stops, Palmdale equating to the lost north LA basin station. If Mojave, etc, were successful in landing a halt, even more delay.
Peter Reply:
August 3rd, 2010 at 12:53 pm
Where do you see Mojave getting a stop? You’re just pulling that out of your ass for FUD effect.
synonymouse Reply:
August 3rd, 2010 at 1:08 pm
They want one. Personally I don’t think they will be successful. But then again never is a long, long time.
Joey Reply:
August 3rd, 2010 at 1:12 pm
Everyone wants a stop. Tehachapi wanted one, lots of tiny towns in the Central Valley want one. That’s why we have the 24 station limit.
Peter Reply:
August 3rd, 2010 at 1:15 pm
And yes, extra route miles of Antelope vs. Tejon will make it somewhat slower. However, it also enables service to the Palmdale/Lancaster Urbanized area (population currently over 475,000)and later likely connecting service to Las Vegas. Although, I know you don’t care about offering HSR service to passengers, since you’d like to cut the CV out of HSR completely.
Peter Reply:
August 3rd, 2010 at 1:31 pm
And you imply by invoking the Tehachapi Loop that there are no valid technical reasons for choosing the Antelope Valley. When challenged on that, you either invoke developers in Palmdale or a lack of cojones on the part of the Authority, without providing any verifiable facts whatsoever.
synonymouse Reply:
August 3rd, 2010 at 12:57 pm
And as to the conspiracy theory all these political links are right out in the open. If you were in the Bay Area and read Willie Brown’s column you would understand we have one, big, happy establishment. Meg Whitman actually fits into it more than is obvious. She endorsed Barbara Boxer in the days before Meg decided to go political. Relax, she is only a little more to the right than the rest and her opposition is very tentative, imho. If she wins, she will have to be won over. A very wise strategy as she demand the clarification that this project cries out for. Brown looks more and more like a geriatric Gray Davis in waiting.
Palmdale lobbying is out front and in your face, like San Jose’s lobbying for Pacheco. Theyf are just taking care of #1. Other parts of the state with no hsr have to make sure they are not taken for paying patsies.
Nathanael Reply:
August 3rd, 2010 at 11:13 pm
*takes a drink*
Joey Reply:
August 3rd, 2010 at 12:21 pm
*takes a drink*
Nathanael Reply:
August 3rd, 2010 at 11:14 pm
It’s the most functionallly important *and has the longest lead time*. Yes, start with it.
thatbruce Reply:
August 2nd, 2010 at 7:35 pm
I want to argumentally agree with you. Closing the missing passenger rail link between the CV services (Bakersfield) and LA services (Lancaster) would be an excellent step, especially given the long lead time of any tunnel construction. Having connecting pieces on one or both sides ready by the time the tunnels are complete would be an even better step.
Considering any effort towards HSR (excluding the San Bruno curve) as ‘money down the drain’ due to the nominated section(s) being smaller than the proposed whole is just foolish. Short of the US redirecting the war spigot solely towards CAHSR, the system is going to be built in pieces, and most likely, the pieces will not be immediately connected to each other, and will not be economically viable without their intended connections.
Politically speaking, this is what is needed. As others have pointed out, get some obvious and visible steps towards HSR built and operating, wine and dine the politicians over them, and the disparate and not economically viable on their own pieces will become connected and become economically viable, despite the ‘money down the drain’ used to build them initially.
Robert, if the point of the HSR stimulus is to build new track for the San Joaquins and Pacific Surfliner, then it’s a bait-and-switch of epic proportions. The California voters didn’t vote for a slightly faster Amtrak; they voted for full-fat high-speed rail connecting the state’s major metro areas.
Now, it’s another thing if California had contingency plans for getting pension funds to invest, or raising taxes to spend state money, or getting a large federal contribution. I think at least one of the three is likely enough that California could round up enough money to build a good minimum operable segment, even if it’s just LA-Merced, which would then create political momentum to spend the money on finishing the system. But this political momentum requires a true high-speed segment, not just upgraded Amtrak. Upgraded service doesn’t make people want more.
Peter Reply:
August 2nd, 2010 at 4:00 pm
It’s not a bait-and-switch, it’s a matter of: We have this money (ARRA funding) with a ticking clock attached to it, how best to use it in combination with the other funds we have available without blowing our timeline.
jimsf Reply:
August 2nd, 2010 at 6:02 pm
The california state trains are being upgraded as part of prop 1a anyway, doing some of those upgrades on sections that will also be used eventually by full hsr trains makes sense. its a 2fer1. Just like the peninsula is a 2fer1 for caltrain/hsr with electrification. Its just unfortunate that the planning is so bad and opposition so loud there. In the valley though, you have fewer obstacles, physical or political. I’d like to know where the valley rail committee is on all this. I have everal co workers who are involved in that. The valley is very pro rail and protective of its rail service so no doubt they will weigh in.
Coming to think about it, if there isn’t money for doing more than a test track, then California should purposely avoid running San Joaquins on it, and instead run high-speed rail. Bakersfield-Merced isn’t a real operable segment, but it would showcase the technology, and potentially get people interested enough to create political support for building an operable segment. If a minimum operable segment is like the two-thirds finished LGV Sud-Est, then the test track is like a more useful version of the maglev test track in Yamanashi.
thatbruce Reply:
August 3rd, 2010 at 9:02 pm
Would the CAHSRA have HSR trainsets available by the time a CV test track section was finished? I also wonder if the lower platfroms that the San Joaquins will need will be kept around when the HSR. And its high platforms are in operation.
Peter Reply:
August 3rd, 2010 at 9:47 pm
I still think that it might be worth it to lease a number of ICE-TDs to run on the test track. That would enable 200 km/h operation without electrification. Among other things, that should enable the FRA to get familiar with ERTMS and develop their regulations for PTC. Assuming they could get a waiver to operate on legacy tracks north of Merced, they could also travel to Sacramento and Oakland.
Once Denmark’s IC4s finally become operational, I predict that the ICE-TDs aren’t going to see much action in Germany. This may be a good use for them.
Joey Reply:
August 3rd, 2010 at 9:57 pm
You’ve still got the FRA issues though. Running compliant trains on new track which will someday be switched over to non-compliant trains is one thing. Running non-compliant trains one existing freight track is quite another.
Peter Reply:
August 3rd, 2010 at 10:00 pm
True. Maybe run a few compliant Talgo XXI trainsets then…
Alon Levy Reply:
August 3rd, 2010 at 10:49 pm
Electrification costs $2 million per km. It’s not nothing, but it’s fairly cheap. Subtract the cost of the extra diesel trains and the higher operating costs of diesel trains, and it costs almost nothing. Do it right the first time; the FRA doesn’t need ICE-TDs to learn ETCS. (As if the track isn’t straight enough for non-tilting trains.)
Alon Levy Reply:
August 3rd, 2010 at 10:47 pm
High-level platforms cost very little, on the order of a few hundred thousand dollars per platform. Trainsets are more expensive, but still much cheaper than the tracks; for the level of service expected on the test track, 3-4 half-length trains should be enough, costing a little less than $100 million.
A little off topic, but this interview emerged in which Kopp defends HSR: http://www.sfgate.com/cgi-bin/blogs/kalw/detail?entry_id=69219
HSRforCali Reply:
August 2nd, 2010 at 7:37 pm
Ben Trefny pretty muched failed at trying to place the project in a bad light with this interview. In fact, he made the project look even better by asking tough questions and getting straight-foward responses. Normally, I’m not a big fan of Kopp; but I have to admit, he handled the interview quite well.
YesonHSR Reply:
August 2nd, 2010 at 8:54 pm
I really don’t know what’s up with this radio station its public ..there always sensationalizing everything asking questions isone thing its another with their slant on everything that they ask
StevieB Reply:
August 2nd, 2010 at 11:07 pm
Ben Trefny of KALW also interviewed Dan Waters of the Sacramento Bee who opposes the project.
Trefny started his questioning with, “What exactly are we on the hook for?”
The interview of Dan Waters is at Sacramento Bee columnist Dan Walters questions support for California High Speed Rail.
The combined interviews are at High Speed Rail: Truth or Consequences.
Robert Cruickshank Reply:
August 3rd, 2010 at 9:12 am
I’m still VERY suspicious of KALW. They treat Bent Flyvberg as if he is infallible, his words gospel. They don’t seem very familiar with the long debates over these issues that transit bloggers have been having for many years now.
Still, Kopp did a good job with the interview.
jimsf Reply:
August 3rd, 2010 at 9:35 am
I just listened to the interview. The interviewer sounds like a 20 year old know-nothing. That guy Walters, blather blather blather, sounds like the old republican coots up in the valley that I grew up around. Kopp was the only one who had any grasp of intelligence and reality which stood out like a sore thumb in contrast to the chicken littles. I fear for our nations future with young people being unable to grasp complex issues. This is journalism? What a joke.
D. P. Lubic Reply:
August 3rd, 2010 at 5:48 pm
From one of my earlier posts (with a couple of minor additions):
Video clips of Walters–what is amazing is how much he sounds (and looks) like a somewhat milder Rush Limbaugh, at least to my ears (and eyes). . .
http://www.youtube.com/watch?v=FfjfO3DSmfI&feature=related
http://www.youtube.com/watch?v=JptZ5J6vpts&feature=related
http://www.youtube.com/watch?v=-VwRTPPhCuA&feature=related
D. P. Lubic Reply:
August 3rd, 2010 at 7:11 pm
Oh, and I forgot to mention in the last post, Walters was born in 1942 and is about 68 years old, part of that “difficult, in-between age” group that is currently between about 60 and 90.
Another article from a TIME writer who gets it.
http://www.time.com/time/printout/0,8816,2002523,00.html
“Without a sustained national commitment, high-speed rail will flop.”
We are flopping.
HSRforCali Reply:
August 2nd, 2010 at 4:16 pm
It sort of annoys me how Obama keeps on talking of constructing a world-class high-speed rail system. He gives some money to this little seed, but it doesn’t have enough water to grow! Unless he wants to see this entire endeavor flop, (building a national HSR system) he better find a way to sustain a steady amount of funding for HSR.
Peter Reply:
August 2nd, 2010 at 4:22 pm
Unfortunately, he just proposes a budget. Congress gets the option of opening or closing the funding hose.
HSRforCali Reply:
August 2nd, 2010 at 6:56 pm
But he was the one who originally proposed only $1 billion a year for HSR. Both the House and even the Senate have gone above and beyond that number.
nobody important Reply:
August 2nd, 2010 at 5:37 pm
I know everyone’s heard this before but it bares repeating. It’s the war in Afghanistan that’s holding everything back.
Nathanael Reply:
August 3rd, 2010 at 11:25 pm
Actually, even if the wars in Afghanistan and Iraq are ended, our *remaining* millitary spending in the US is still larger than the total military spending of every other country in the world *combined*.
Over 600 billion dollars.
So the military is holding us back. Where’s my peace dividend? The Cold War is over.
jimsf Reply:
August 2nd, 2010 at 7:14 pm
Congress is a freakin mess right now and unfortunately, in November its going move to the right and its going to be nearly impossible for Obama to do anything else. Now granted, Clinton was able to work wonders with a republican congress but Obama does not have what Clinton had in terms of political saavy and slickness.
It may not be all bad though. I tend to think (hope anyway) that what will happen after November is that the right will move back to the center once they have sucked the votes out of their suckers. ( in the 80s and 90s it was the moral majority and the christian coalition, with gays as the boogieman, whom they used then later betrayed- to get elected. This time it will be the wing nuts, the tea party crowd, etc, with immigrants as the boogieman. Once they get elected, the republicans return to their job of effin over working people and protecting the super rich and corporations. And they will be fine with making deals with obama on junk like hsr, so long as he will make deals with the devil with them in other areas. That’s what happened in the 90s. The upside is we will have a boom for the 2nd half of Obamas 2nd term, the downside is that will sell our souls to get it. I’ve finally been alive long enough to see the pattern for myself, just like my dad always told me has been going on since the 20s and 30s. Its never pretty. Just remember to hold on to your dreams and keep some money in a sock under your mattress for later.
D. P. Lubic Reply:
August 2nd, 2010 at 8:30 pm
I wish I could be so optimistic. Where is the boom going to come from?
At the peak of the housing bubble, according to eithe Time or Newsweek (I’m working from memory here), we were building about 2 million houses a year in the US; normal demand was only about 700,000 per year. That means in two years we built as many houses as we would normally sell in six. Who is going to buy all this?
Same thing with cars. We currently have 117 vehicles for every 100 drivers. How many can we use?
Everyone is out of work, or if they are working, are paying down their credit cards and other debt. If you are paying all that debt, that’s a good thing to get out from under, but in the meantime, it’s also money you don’t use to buy something else. Where are the new customers supposed to come from with money in hand?
Back to the housing industry, I recall a comment by an economist for an organization that is or was something like the American Home Builders Association. This was in the Baltimore Sun. This economist, speaking of his housing industry, said that this industry “had activity in excess of economic indications;” in other words, his industry built too many houses! (I love such understatement!)
I have a book called “The Insolent Chariots,” by John Keats. It’s a sort of anti-auto, or more properly anti-auto industry screed from 1958. One of the things Keats writes about is that he thought the car industry, including the cars themselves, were totally dishonest. His idea of an honest car would be something like a Model T or VW Bug, but it could include something as exotic as a Hispano-Suiza or Bugatti roadster from the 1930s; his point was that these cars were just cars, and they weren’t trying to pretend to be airplanes or rockets (remember, when this was published, most cars had fins).
An interesting comment he had was that following the market level for cars reaching about one per household in 1950, the car industry went on a selling binge, selling a lot of cars on recently expanded time terms (prior to 1949 a car loan was limited to 24 months by law), which included selling a lot of cars on time to people with questionable credit histories (where does this sound familiar?) The end result was an oversaturation of the car market, and a recession that lasted several years in the late 1950s. Keats worded it as “stealing sales from future years.”
Much of this applies today, except we oversold future sales on an enormous scale. It will take years to recover, and as awful as it sounds, I hope it does take a long time. What we had going was crazy, it was unsustainable. No one who really thinks things through wants us to go back to exactly what we’ve had the last 10 years or so.
There is also the demographic change we seem to see. It’s a good thing, but it will not help revive America, at least what we’ve had for at least the last 10 years.
At the same time, I’m as angry as hell that we have been such scaredy-cats at the thought of railroads and transit that we have gotten ourselves deeper and deeper in the hole on oil dependence, and in doing so have place a noose around our collective necks that can be jerked by some king in the Middle East. This foolishness threatens not only us, but the same corporations the Republicans are trying to protect.
I am epecially angry that I personally tried to make a small difference in this by promoting a local light rail scheme, and all I got was called dirty names for it. My personal efforts turned out to be a total waste of my time and my very limited resources. I have nothing to show for my efforts except my own writings, and seeing that all the other idiots are being proven wrong. It’s not much of a consolation, even when I enjoy seeing the fools squirm at the clumsy excuses and then have to deal with angry voters who know something is wrong, even if they can’t quite figure out why.
I do know enough not to vote for any Republicans for just the reasons you mentioned. They have betrayed their so-called base, and the devil’s deals they have extracted have brought us to the brink. The Democrats are nothing to praise, but the Republicans are far, far worse.
I’d rather see us elect some real Communists and real Socialists; at least then we would have other voices, and things would likely br more interesting!
For the record, I am registered as Independent, but am thinking of changing to the Mountain Party (regional party in West Virginia).
Oh well, back to the waiting game. . .
jimsf Reply:
August 2nd, 2010 at 8:48 pm
Well I agree with everything you just wrote. I’m assuming two things for the near-mid future 6-10 years out- that one, the scheisters, movers and shakers will not rest without coming up with new bubble schemes and americans will find a way to pay and fall for them and their promise of easy wealth, and two, the technology ( and no big tech fan at all) technology, especially in the medical arenas, bio tech, etc will bring a boom similar to the dot com, only hopefully with more substance and value. We are a part of a global economy so even if its not americans who initially buy and spend, we will see global activity that will stimulate the US economy. That’s what I’m thinking will happen. Only because it has to happen. It always happens. We don’t have permanent recessions. Its like nature abhoring a vacuum. Something has to give. something will happen cuz people will make it happen. Unless one is going to suggest that we are permanently doomed. I’m not fond of optimism, its about as useful as reading your daily horoscope, but the very nature of the universe says things have to flow and react. up down in out back forth. The global economy is like a pinball machine, unless the whole thing remains at rest, things bump into other things and that makes other things happen. WE have to recover. It simply must be.
Alon Levy Reply:
August 2nd, 2010 at 9:17 pm
Turning anything in biomed into a bubble would require gutting FDA regulations. The Republicans and the biomed industry are already working on that, but if they don’t succeed, and in the current political climate they probably won’t, then it will be very hard to hyperinflate biotech and medical research. In such an environment, a biomed bubble is as likely as a housing bubble would have been in the absence of the 1990s-era deregulation of financial institutions.
Eric Janszen argues that the next bubble is going to be alternative energy, which is much more politically popular. (Google “The Next Bubble”). It’s not hemmed by federal regulations, it’s considered a moral imperative, and it’s undergone serious cost inflation in the last ten years.
jimsf Reply:
August 2nd, 2010 at 10:33 pm
you’re right, energy slipped my mind. That would be the more obvious item versus bio, (its just that here locally in sf, they are going on and on about preparing for the bio boom that will supposedly make the dotcom look like peanuts – personally, after what the dotcom wealth did to decimate our city and its people, I’m in no hurry whatsoever for any “next wave” of destruction)
joe Reply:
August 2nd, 2010 at 11:01 pm
One difference with the bio-medical “boom”, CA has the laws, funding and infrastructure to give it a national advantage. CA has attracted world class talent because our facilities were intentionally not made with or rely on federal funding, hence the federal laws restricting stem cell research don’t apply.
D. P. Lubic Reply:
August 3rd, 2010 at 7:05 pm
Actually, we have been what seemed like a permanent depression before–the Great Depression of the 1930s, which lasted the better part of 10 years, and was only relieved out by heavy govenment deficits because of a war.
I highly recommend a book called “I Travel By Train,” by Rollo Walter Brown, written during 1937-1938 and published in 1939; interesting view of the country (and capitalists riding on expense account) from that time.
Oh, I am aware of some economists who suggest the Depression was made worse and extended by government relief efforts. I’m not sure they are right, especially considering how they seem to have been so full of hooey and themselves as to not see the approach of the troubles we are in.
To paraphrase Bugs Bunny, “What a bunch of maroons!”
D. P. Lubic Reply:
August 3rd, 2010 at 7:14 pm
http://manybooks.net/titles/brownrother07I_Travel_by_Train.html
Nathanael Reply:
August 3rd, 2010 at 10:38 pm
It’s the Senate that’s the mess (the House is doing OK), and it’s the stupid 60-vote rule. They need majority rule in the Senate.
Just in case this hasn’t been mentioned: The April 2010 addendum to the CAHSRA 2009 business report has a graph (A scenario of possible funding source) on page 29. In this scenario private funding begins in FY 2015.
jimsf Reply:
August 3rd, 2010 at 8:59 am
Do you have a link to that chart I can’t find it on the site.
Derek Reply:
August 3rd, 2010 at 5:34 pm
Page 29 of: http://cahighspeedrail.ca.gov/images/chsr/20100427185725_Business%20Plan%20ADDENDUM%20-%2004.13.2010%20-%20FINAL.pdf
There’s an even easier explanation:
Most financial institutions do not make money any more holding assets and instead seek to maximize fees. Foreign banks and other international investors by contrast, would want to hold the assets associated with the project: rights of way, trackage and portage rights. Wall Street just wants to issue a bond, collect its cut and move on.
There is not a lot that even Congress can do about this: the Federal Reserve sets interest rates that dictate strategy for all but the largest banks.
TomW Reply:
August 3rd, 2010 at 6:35 am
Investors are more likely to be like pension funds, who like to buy fixed assets that will keep generating cash indefinately. (Berkshire Hathaway springs to mind as well).
Risenmessiah Reply:
August 3rd, 2010 at 11:11 am
Actually no. Pension funds are creatures of their defined benefits and with demographics being what they are, CALPERS (as an example) would find the HSR project currently too risky. They have to pay out a lot of checks from retiring workers between now and when HSR would break even. You need an investor who is looking long term…and there are very few (even Buffett) who are able to do that given the current market dynamics.
Moreoever, Buffett helps the Administration out in the bailout and probably will get some sort of sweetheart concession as part owner of BNSF. He probably doesn’t want to risk his fortune building the infrastructure that the federal government is afraid to.
Nathanael Reply:
August 3rd, 2010 at 11:23 pm
It’s the sort of business Buffett would be happy to get into, actually, but the fact is that he doesn’t own one of the major construction businesses of the right sort. He doesn’t do startup (except in insurance), he only invests in other people’s startups (complete with management).
Because Transrapid wasn’t Gadgetbahn enough for China: http://news.yahoo.com/s/huffpost/669166
Peter Reply:
August 3rd, 2010 at 6:13 pm
And here’s the video: http://www.umiwi.com/video/detail1541
D. P. Lubic Reply:
August 3rd, 2010 at 6:43 pm
Wow! This thing makes PRT look, well, at least not as strange!
Let’s give them credit for creativity, although I wonder about (a) the inevitable collisions with auto traffic, despite the warning devices that are apparently to be worked in, and (b) that emergency exit system–imagine that for people on crutches or in wheelchairs! Zowie!
Jack Reply:
August 4th, 2010 at 12:11 pm
No ADA act in China. Rail using existing ROW and still allowing traffic to pass underneath… freaking Genius!
D. P. Lubic Reply:
August 4th, 2010 at 6:07 pm
Wonder what the monorail enthusiasts would think of it? (Actually, can make a good guess. . .)
For reference:
http://www.monorails.org/